The changing face of SMSFs

Self-managed superannuation funds increased allocations to international equities by 30% in the first half of 2018, as well as upped exposure to listed investment companies and trusts in a bid to reach new markets.

According to the latest Commsec SMSF Trading Trends Report, SMSF investors are increasingly turning to international equities for greater diversification and returns, attracted to investing in what they know such as Facebook and Apple.

"This trend to add international shares is strong among SMSFs who often use a core portfolio of Exchange Traded Funds (ETFs) or managed funds for diversification, then add high conviction individual stocks such as Facebook, Amazon, Apple, Netflix, Google or Berkshire Hathaway in an effort to enhance performance," Commonwealth Bank head of SMSF customers, Marcus Evans said.

Amazon, Apple, Facebook, Tesla and Berkshire Hathaway are the top five international stocks by trading value, while Alphabet Class A replaces Tesla in the top five when it comes to holdings.

Use of international LICs and LITs is also on the rise for those looking to tap into new asset markets, particularly offshore. Between January 2018 and June 2018, the value of LIC and LIT trades executed by SMSFs rose from 23% to 26%.

WAM Capital, Argo Investments, Magellan Global Trust and MCP Master Income are among the top LICs and LITs, with trades of MCP Master Income increasing 60% by value in the six months to 30 June.

"Overall, recent trading data confirms that the new, internationally focused LICs and LITs have carved out a significant niche, despite the considerable head start enjoyed by long-established domestic LICs," the report reads.

In regards to Australian equities, SMSF investors are still frequently looking outside of the Top 20. Frustrated by underperformance, mid and small cap companies are benefiting and ASX20 shares now only account for 33% of the total value of shares traded by SMSFs - this is down from 40% year on year.

However, Commsec noted that these figures do not mean SMSF investors are abandoning the stocks that have traditionally formed the foundation of the portfolios. They are merely seeking out greater value.

"Analysing buy/sell ratios for individual stocks, we see SMSFs taking advantage of share price weakness to buy into companies like AMP, Ramsay Health Care and Telstra, in a blue-chip bargain hunt that reflects an underlying belief in the long term prospects for these ASX stalwarts," the report reads.

"Outside the ASX20, we've seen SMSF bargain hunters turning to the resources sector, with buys heavily outnumbering sells in lithium miners Pilbara Minerals (PLS) and Galaxy Resources (GXY)."

Read more: AppleFacebookCommsecAmazonBerkshire HathawayMCP Master IncomeTeslaAlphabet Class AArgo InvestmentsCommonwealth BankGalaxy ResourcesGoogleMagellan Global TrustMarcus EvansNetflixPilbara MineralsRamsay Health CareTelstraWAM Capital
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